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Wall Street Flipping Main Street Off Housing Rebound

Investors in other markets in Arizona, Caifornia and Nevada complain of similar experiences. Inventory in these markets have begun to tighten driving up prices quickly.

And while it would seem that rising home prices should give real estate agents a cause to cheer, they are not too happy with the trend of banks selling REOs (Real Estate Owned) in bulk to investors either.

Marge Peck, an Arizona-based real estate agent with over 30 years of experience who specializes in short sales, accuses Fannie Mae and banks of controlling housing inventory and supply, instead of allowing market forces to take over.

"Fannie Mae bundled 200 properties in Arizona into a bulk sale. Those properties never had a chance to be in the market," says Peck. She says the housing giant's plan to get rid of foreclosed homes is " kind of like going fishing where instead of using a hook and bait, you just point a gun in the water and blast the fish away."

Still, the experience in Arizona and California is likely to be vastly different from that in markets such as Illinois or Florida, where foreclosures follow a judicial process.

In testimony before Congress earlier this year, FHFA's senior associate director for housing Meg Burns said the REO to rental initiative was "highly inappropriate on a national scale," and that "markets are carefully selected, based on obvious market characteristics - an oversupply of single family homes for sale and a strong demand for rental housing."

Illionois-based MACK Companies is an example of one company that has actually capitalized on the institutional investor interest in single-family homes.

The company has been investing in single-family homes and converting them into rentals for the last 15 years. Now they are being approached by large institutional investors who are looking for property management companies with local knowledge to help manage their investments.

" The demand for rental units is real," says Eric Workman,VP Sales and Marketing at MACK Companies. "I do think some of the big money has priced the individual investor out of the market. You can see it in Phoenix, it is also beginning to happen in Atlanta."